Understanding Personnel Salaries in District Budgets

I interviewed the Director of Finance and the Superintendent of Orangefield ISD to gain their insight on the issue of personnel salaries.  Both stated that our personnel budget accounts for 73% of our total budget.  We are striving to reach the 80% mark, which is the percentage in which many school districts operate.  This year, our budget was cut in almost all areas.  Because of the low percentage earmarked for personnel, this budget was not cut.  If our personnel budget was closer to 90%, there would have been very few places to cut besides personnel.

The positive impact of raising the salaries of all personnel by 5% would be that morale would increase.  The negative impact would be that the money would have to be taken from another area that has already been cut.  This would cause stakeholders to complain that funds aren’t going to educate the students as they are supposed to.  Also,  the employees at the upper end of the pay scale would receive a larger amount, while support staff who get paid a lower salary would not receive as much.  To keep from causing an imbalance between the staff, OISD pays longevity stipends in December of each year.  This stipend rewards service to the district and is not based on a percentage of a staff member’s salary. For example, a custodian or food service employee who has been with the district for 10 years receives the same amount of money as an administrator who has been with the district for 10 years.

Analyzing OISD's M&O Fund

For this assignment, I reviewed the 2009-2010 Budgeted Financial Data for Orangefield ISD on TEA's website to gather facts.  According to the data, the Maintenance and Operations Fund (M&O) source of revenue is based on several factors that include the ADA, WADA, and local tax revenue (2005-06 funding).  31.48% (or $3,600,000) of our district's M&O fund comes from local taxes, 67.18% (or $7,681,499) from state taxes, and .16% (or $18,000) from federal taxes.  The main factor in determining the M&O is ADA and student population.  The WADA is important because each student has a weight based on their "status" and this weight can increase per pupil accounted for.  Some examples of WADA allotments are special education, compensatory education, career and technical education, bilingual education and gifted and talented education.
After reviewing the 2009-2010 Budgeted Financial Data, I found that Orangefield ISD's M&O Fund for this past year was $11,369,656.  48.95% (or $5,488,499) of these funds are appropriated for instructional purposes.  Payroll expenses account for 78.52% (or $8,927,040), other operating expenses account for 20.10% (or $2,285,016) and capital outlay accounts for 1.39% (or $157,600) of the M&O.  Currently, our district is operating in the black based on revenue versus expenditures.  For 2009-2010, the district had $11,434,949 in revenue and operating costs of $11,369,656.  This is a surplus of $65,293.
The district has been growing at a consistent rate and was budgeting for an increase in students for the current school year.  In reality, we had an unplanned shortfall when our enrollment dropped by 50 students.  These figures, which were budgeted for 50 additional students, are adjusted and monitored carefully and monthly updates are reviewed by administrative personnel and shared with all district employees.  OIDS's M&O allocations and our district expenditures are closely related.  Allocations appear to be appropriate, with very few areas to watch for overspending.  There is concern among the administration about expenditures due to the decrease in student population and this concern has been shown by cutting budgets across the board.
According to the Financial Integrity Rating System of Texas (FIRST), OISD has scored a Superior Rating for seven of the past eight years, with a rating of "Above Standard Achievement" in the 2003-2004 school year.  The main areas of concern are the State of Texas' financial issues and what impact they could have on future funding, which will affect our district.

Types of Input Received for Budget Development

Based on the interview of our district's Superintendent and Business Manager, I learned that our Business Manager prepares a budget from requests that campus principals make.  The Superintendent and Business manager review the requests and look at past expenditures to see if the numbers are appropriate.  The Superintendent has insight as to what the board may want to include in the budget.  An example of something the board may want to include is raises.  The Superintendent and Business Manager try to work them into the budget.  The Superintendent and Business manager try not to present something that doesn't have board support and put them in the position of being the "bad guys."  The Superintendent and Business Manager also look at new initiatives that administrators may want to implement and see if there is funding for them.
The type of input that is received from Principals while developing the budget is in the form of budget worksheets that are given to all administrators.  The principals/administrators review the worksheets and make any changes they feel are necessary.  The principals get input from SBDM committees while reviewing the budget worksheets.  The District Improvement Committee, Teacher Organizations and community members have a minimum amount of input in the development of the budget.  The Board of Trustees has opportunity to review and make changes to the budget at budget workshops.  They also adopt the budget.  This is one of their major responsibilities.

Superintendent Interview

Based on this week’s readings and Superintendent and Business Manager interviews, I learned that the Superintendent plays an integral role in the budgeting process.  I found the reading in Learning from the Best: Lessons from Award-Winning Superintendents to be very informative and thought that expending the budget ideally at 98 percent of the gross estimate would be a great method of ensuring a balanced budget, if possible.  I had never considered that a Superintendent should spend the equivalent of one work day per week, or 20 percent of their time, reviewing the district budget.  I understand why this is necessary, but this is an area in which I will have to pay close attention and learn considerably more about to feel comfortable and confident that I know what I am doing.

TEA Budgeting Guidelines

I believe that the document titled, “TEA Budgeting Guidelines January 2010,” is a very important document for anyone wishing to learn more about school finance and the budgeting process.  I have stated from the first Superintendent class that finance is probably my greatest weakness.  I found this document to be very helpful to me in understanding school finance.  I learned many things while reading the budgeting guidelines document.  For example, our district uses the line item approach to budgeting.  I thought that there were no other processes of budgeting for a district and that all districts used the line item method.  I also achieved a better level of understanding related to Tier 1 and Tier 2 allotments.  I believe that these guidelines will help me be able to contribute to developing a district budget because I can review the guidelines and actually understand the process better than in the past.

A Goal Driven Budget

A goal driven budget is a budget which is based upon the goals of the school district.  As Dr. Arterbury stated in this Week’s interview, “The district and campus goals should reflect the Board goals and the budgeting process should reflect a commitment to expending funds to achieve those goals.”  When developing campus and district plans, the budget and programs should be considered to determine if they are being used in the best way possible to support goals.  I believe that Orangefield ISD does an excellent job of thoroughly reviewing district and campus plans and then analyzing the budget to determine which money can be allocated to support the goals.  

A goal driven budget is important because districts need to know what they are striving to achieve and they need to have the means to achieve that goal through the support of the Superintendent and the board.   Meeting campus and district goals is the “prize at the finish line” and using the budget to attain the goals is the “roadmap” to get to the finish line.  All districts need to know where they are going, or what the goals are. When they understand what is expected of them and where the district is headed, faculty and staff members are better able to accomplish these goals and present a unified organization with the same end in mind.

Meeting with Site Supervisor

My Superintendent, Philip Welch, comes to my campus and meets with campus administrators monthly.  After our monthly campus administrator meeting, Mr. Welch met with me about my Intern Plan.  He told me that my plan looked good and that I would be very busy with the activities I had chosen.  He made two suggestions for changes or additions to my plan.  The first change was the addition of another community member / retired teacher on Activity 30a.  I added Mr. Doug Wilson to my list of people to interview based on Mr. Welch’s recommendation.  The second change was to Activity 35a.  When I wrote the plan, I could not think of an issue on our campus to research.  Mr. Welch suggested that I research G/T on our campus.  At this time, Orangefield Elementary services G/T students beginning in the spring of their Kindergarten year.  The Kindergarten G/T students are serviced through a pull-out program.  First graders through fourth graders are placed in a “Challenge” class.  This class is made up of the identified G/T students and “over-achievers.”  We are planning on phasing out the “Challenge” classes and going to a pull-out program beginning in first grade next year, adding second grade the following year, and so on until all grade levels are in a pull-out program.  We know that the current G/T teachers and parents of the over-achievers are not going to be happy with this arrangement.  I will be researching this issue for activity 35a.